If you do a search on this and the Rumours and News forums, you will find plenty of discussion about this topic. As far as I can tell, no merger is likely unless Virgin can get (and use) BMI's slots at Heathrow. Virgin has no ambition to operate full-service shorthaul, which seems to be a guaranteed way to lose money just now, so what else is in it for them? The way I read it, this 'merger' (if it ever happened) would in fact be a takeover of BMI by Virgin in order to obtain slots, and for no other reason.